Second drugs takeover called off as Abbive pulls out of £32bn pursuit of Shire

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A second major takeover of a UK drugs company has been scuppered after the board of US firm AbbVie called off its £32bn pursuit of Shire.

The Illinois-based company recommended its shareholders vote against the deal because changes in US tax law made the purchase less attrac- tive.

Basingstoke-based Shire, best known for its drugs to treat attention deficit disorder, will receive a break fee of 1.6 billion US dollars (£1bn) once a meeting of AbbVie shareholders is held to rubber-stamp the decision.

In May, Viagra maker Pfizer was left frustrated after its final offer of £69bn for Cheshire-based AstraZeneca was deemed inadequate.

AbbVie agreed the purchase of Shire in July when it said the combined company would be domiciled in the UK in a move taking advantage of a lower corporate tax rate.

Since then the US has announced it will crack down on the tax inversion practice, which has already seen a large number of firms use foreign takeovers as a way of lowering their tax bills.

The tax inversion policy had been under consideration by Pfizer when it bid for AstraZeneca.

AbbVie chief executive Richard Gonzalez said: “AbbVie has always been financially disciplined and we have rigorous standards in place to ensure transactions are financially sound and deliver compelling stockholder re- turns.

“Although the strategic rationale of combining our two companies remains strong, the agreed upon valuation is no longer supported as a result of the changes to the tax rules and we did not believe it was in the best interests of our stockholders to pro- ceed.”

The meeting of AbbVie’s board was brought forward after Shire waived a three-day notice period for the meeting to be held because it wanted to remove uncertainty for shareholders and staff.